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April 7, 2010

From extreme home makeover to foreclosure

ABC's Extreme Makeover: Home Edition was one of many TV shows that portrayed and fueled the housing bubble. Now, reports the Wall Street Journal, it's reflecting the bust, too. Some makeover beneficiaries can't afford their fabulous new shelter, and the show's producers are downsizing to more modest quarters.

But after the cameras have gone, another trend has been developing: Homeowners struggle to keep up with their expensive new digs. In many cases, the bigger, more lavish homes have come with bigger, more lavish utility bills. And bigger tax assessments. Some homeowners have tapped the equity of their super-sized homes only to fall behind on the higher mortgage payments.

The show's producers say they are aware of the problem and are making changes appropriate to current economic reality: downsizing.

Posted by Jay Hancock at 7:50 AM | | Comments (30)
Categories: Celebrity mortgage victims
        

Comments

if the people that are selected to be the family that receive the 'extreme makeover' then the house should be GIVEN to them w/out a morttgage pymt.

smaller, smarter, simpler.

Its not that they get a new mortgage... Its that they have to pay higher taxes due to the value of the home. Also, like the article mentioned. some of the new homeowners are getting equity loans b/c there houses are worth more... Big no- no for people who most likely already have money issues.

The problem is that alot of the homeowners see the new homes as a free payday. They mostly have money issues to begin with. Otherwise, they wouldn't be living in the conditions that they do. I thought extreme home makeover was rebuilding the homes at the same value of what their current home was worth or where their mortgage already stood. Why would they build these homes and give them astronomical mortgages when they live in hovels.

This is just a metaphor for what's been going on in our country with the economy. Irresponsible people being given too much rope. They're hanging themselves. It's a shame but the smart thing to do would have been to immediately sell the refurbed home and take that cash and put down a larger percentage on something YOU CAN AFFORD

Like these people need those houses anyway...extreme being the key word. What about a sensible home? Oh, that wouldn't sell.

As much as I love the concept of the show I had always wondered how expensive the new homes would be to maintain. Now I see, unfortunately, my concer was correct. I am sure the producers will come up with a good resolution. I hope they do, because we need positive experiences to relate to.

How about a Habitat for humanity approach, have the recipient put some sweat equity in there too. that in itself would downsize the project. Might make them appreciate what it is and have a clause that they cannot mortgage the property for 10 years.

I just saw the rerun of the Vardon Family (2004) and was wondering how they were doing. I just loved them. Is there any website where I can see how some of the families are doing now?..........SueC.

They are not left with a mortgage guys. They pay off the mortgage and give them CASH at the end of the makeover. The problem is, these people go take a loan on the house AFTER it is paid for and upgraded. They tap the equity, gamble away the money, and suddenly can't afford the payments on their home equity loan (also called a 2nd mortgage). Nobody is dumping an overvalued loan on these people, they do it to themselves. You can lead a horse to water, but you can't make him drink. You can give a man a fish and feed him for a day, but if you teach him to fish, you feed him for life.

These people already had financial issues. Now they see more opportunities such as the man who wanted to start a construction company and borrowed money against the equity to do so. Didn't get started and now he is in deep trouble again. Some people never learn. They live in the same rut all their lives.

I'm not sure the previous commenter(s) understand: They are given the homes without a mortgage. They're free and paid for, ready to move in. The mortgages that the owners have on these homes are the ones they went and took out based on the equity of their new "McMansions", not ones the show saddled them with. However, there is something to be said for the large increase in utility bills and taxes that the owners have to deal with. I'm glad the show has decided to start building more reasonable homes.

I don't get it. It's is like they get they house for free and think that it is easy sailing from there on and what they don't understand is you now need to work your little butts off to keep it. You give someone an inch and they think it includes the whole mile; an inch is an inch, you have to work for the other inches and to keep the inch you were given. NOTHING IN LIFE IS 100% FREE! Smart planning, hard work and money management is all that is needed to keep these recipients in their extreme homes.

How can this society blame this on the show? This is their own fault for taking out a second mortgage. Yes they may have some higher bills and taxes, however, they no longer had a mortgage. What is going on with our society to blame this on the show and not the individuals responsible for taking out the 2nd mortgage. It is a great show and I hope it continues as is.

I'm a neighbor to an Extreme makeover home. They did not pay off his mortage, did give him some money at end of show but not enough to pay off original mortage. The house had issues because it was built so fast. He did take a 2nd mortage. The property taxes, heating, lights etc. increased greatly plus up keep on the home. Not a good deal. It was built in a poor econonic area the guy lost his job. He had to stay in the house 2 years tried to sell it, the bottom fell out of our economy and there you are. They could have built 3 homes in our area for the price of one. Shame on the Extreme Makeover people for setting them up. Plus the towns people that donate time, materials, and labor feel ripped off when the house forecloses. Then the stories really fly about the recipient of the house. Not good!

you know its nice to have nice things. but very nice turns into very pricey and honestly, why take what you cant afford? I mean good intentions are one thing, but if it ends up being taken away. what good did it do. high hopes, and no possible way to keep it up.

Be nice.What that show is doing is trying to help people. That is more then most people are doing. He who lives in a glass house let him or her be the first to cast stones. Many of us are in situations that are less then ideal for what ever reason, i.e poor choices, loss of a job etc. but we live in a great country with so many wonderful people so lets support each other and stop being so mean.

To keep up with the times and in order to truly "help" people they need to stay in the same value range as the current home and they have to go GREEN so that they can knock down the cost of living for the family.
They use too many lights, lol, in most of the house they build...I like the idea, it just needs to be adjusted to fit with the times.

The show isn't giving the homeowners's a big mortgage to go along with the house. It's just that when they demolish the OLD house, the people still have a mortgage to pay on that OLD house. They get the new house built for free, of course, but that doesn't mean that the homeowner's old mortgage for the demolished home just miraculously disappears. They still are liable for that old mortgage. In addition to having to continue to pay that mortgage on the demolished home, they now have larger utility bills, because of living in the new larger home as well as increased taxes to pay, because of now having a home worth alot more money than their old home. On newer episodes, many times, the show finds a way (donations, ect) to pay-off the homewoner's mortgage on the demolished home so that they no longer have a mortage to pay.

I would like to see smaller, more affordable houses built for these people. There is no reason to build a mansion that will have higher taxes and extreme utility bills. Bigger is not always better. Extreme Makeover could build several homes for the price of one, or build one home and another facility for their community.

People that blame ABC for the family going into foreclosure. Why? The families, or head of the family, decided to use what they were given as collateral on loans they couldn't afford to pay back. They did it to themselves, nobody told them to run to the bank and borrow money. Failed business ventures, spending issues...those aren't the fault of ABC, they are the fault of the families that probably shouldnt' have been given a home in the first place, for now obvious reasons.

I was wondering if they ever thought about just re doing a home just needed a new roof & paint instead of a totaly new one instead.

I think its a great show, however, they are building these huge houses that are just way too much money. I agree that in most cases a remodel would be sufficent. People forget the mistakes they made to get them in that position in the firstplace. And then they get reverse mortgages, and home equity loans, and right back in the same boat. The show is a great idea, and has done alot of good for alot of people, and inspired millions of American people. but you cant just sit back and live for today, you have to work hard, bust your ass, and plan for the future. It should be viewed by the lucky few that get this opportunity as a fresh start, and to go out and work harder, and make it work, and never let it happen again. But not all situations are the same unfortunately.

Try Extremely making over one of the schools here in Baltimore. That would be helpful.

My wife and I are BOTH disabled and fighting to get our house "modified" but in no way would we ever go all out and build a huge house that we could not afford to keep (due to taxes or utilities). We would simply want the inside gutted and modified to allow a wheel chair access to every room (which is not possible currently). My wife is partially wheel chair bound due to a near fatal head on accident 13 years ago. Her auto insurance is supposed to pay to have the modifications done but they have been fighting us for almost 2 years because of us moving out of a "30 year old trailer" into an actual home. I think they expected her to live in a single wide trailer the rest of her life. I became ill with hemochromatosis, and have not been able to work for going on 2 years. I have been fighting SSDI for over a year now. They say that the medical evidence shows I am disabled, however due to conflicting statements (not about my actual condition but rather other things) they denied me at the hearing level. I have an attorney now working on it. I had been working 55 to 70 hours a week for the past 20+ years and would work if I COULD!! - the link is about my wife's accident

While some of the families desperately need amenities put into the homes to accommodate ill or disabled children, what happened to being truly "green?" I don't know how green it is to blow up a perfectly good structure when you could salvage materials from it. Also, when you consider the area where the original house is located, it doesn't do the owner much good to have something so outrageously beyond the rest of the neighborhood. It hikes his taxes and those of his neighbors. Instead, why not look at things that an entire block could do together, like a community park or garden, or helping neighbors refit houses with more efficient windows and doors? I think this is too much of a showcase for manufacturers rather than practical solutions.

The houses they build are too big. Triple the taxes and utilities for people that had a hardship to start with. Not smart. I'm with fix up a few homes instead of building one monster for someone that can't afford it. I'm with them keeping the house in line with the neighborhood. Some of the reasons for these new homes really suck. Not a reason to get a new home. Have a good holiday season..

I am living with this currently being done in my neighborhood. The house they are building is almost 4 times in square footage to what they had. It by NO MEANS fits our neighborhood. I am still baffled by how she was selected, she purchased the house less than 6 years ago for $200k with new siding, window, doors and HVAC and yet they say it was crumbling beneath her and her family. I get tired of the sob stories. So she raised 2 grown biological children and has done foster parenting for years and has adopted 6 of those children. Along with that she feeds the homeless all by herself. All of this she did while single, she has now been married less than a year. Exteriorly her house looked better than mine and I live in the exact same style house as she USE to. My suspicions were confirmed that this is all deceptive, I truly wish it had never come to my neighborhood. The reveal to the family is tomorrow. The "community" won't be there because there are only slotted space for 1000 people and that is for the vendors and construction people who built the montrosity. I give them 5 years, the "honeymoon" won't last long!

When this show first began I did not miss it for any reason. I was an avid fan, who loved to see people who truly needed help receiving it. However, I seldom watch anymore. Somewhere along the way they decided bigger is better. I can not understand taking a family who is already struggling and adding more financial responsibility. I put myself into those families shoes, with several big differences, I have a good job, no health issues draining me or my bank account, I am not deeply in debt, yet I could not afford the extra strain of raised utilitiy bills, taxes, etc...A good house could be built that would much better serve the needs of these families, until that happens, I will continue to be a former fan!

I understand your comments to the family,but u have to understand these family needed a new house bcause the old house wasnt working for and some of their family members are handicapped and had nowhere t go and no one would help them with their problem and they turned t extreme makeover to come helped them and they came and they helped the family and please dont judge them bcause of their new house how would u feel if u were on extreme makeover and they made u a new a house and it got foreclosed how would u feel

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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